Redemption Policy Change Sparks Market Turmoil
Usual Money, a decentralized stablecoin protocol, has revised the redemption mechanism for its staked derivative token USD0++, triggering a sharp sell-off and a supply contraction of the underlying stablecoin USD0. Previously, USD0++ could be redeemed for USD0 at a 1:1 ratio, but the new policy altered this peg, breaking the arbitrage equilibrium that supported the token's value.
Price and Supply Data
According to CoinGecko, the price of USD0++ dropped over 8% on January 9, hitting a low of $0.905 — well below the expected $1 peg. As of January 11, 2025, USD0++ had partially recovered to $0.939, still far from parity. Meanwhile, the non-staked USD0 maintained its $1 peg but saw its market capitalization (total supply) fall from a January 7 peak of $1.88 billion to $1.54 billion — a reduction of approximately $340 million in just four days.
Governance Token USUAL Under Pressure
The protocol's governance token, USUAL, also suffered. It declined 3.7% in the past 24 hours and recorded a weekly loss of 33.1%. At a current price of $0.63 and a circulating supply of 514 million tokens, USUAL's market capitalization stands at $328 million. Analysts note that USUAL's value is tightly correlated with USD0++, and any policy change affecting the staked token quickly spills over into governance token sentiment.
Broader Implications
Despite the turbulence, USD0 remains a top-ten stablecoin by market cap, comparable to First Digital's FDUSD. The Usual Money team stated that the redemption adjustment was made to optimise the protocol's economic model, but the sudden nature of the change has sparked debate within the community. This episode underscores how parameter modifications in DeFi protocols can rapidly transmit to secondary markets, affecting prices and liquidity. Market participants are now watching for further announcements from the team and potential recovery in USD0++ valuation.